EXCLUSIVE: Whole Foods chain faces city probe after investigators found ‘worst case of overcharges’
BY SARAH RYLEY , REUVEN BLAU
NEW YORK DAILY NEWS
Tuesday, June 23, 2015, 9:17 PM
SUSAN WATTS/NEW YORK DAILY NEWSDaily News reporter Reuven Blau shops at Whole Foods on Greenwich St. in Tribeca to determine the accuracy of weighted items on Tuesday.
Rip-off on aisle four.
The city has launched a probe of Whole Foods Markets after investigators nabbed the upscale food purveyor for routinely overcharging customers on groceries during dozens of inspections dating back to at least 2010, the Daily News has learned.
The most recent spate of violations came during a sting operation the Department of Consumer Affairs conducted in the fall that specifically checked the accuracy of the weight marked on pre-packaged products.
Inspectors weighed 80 different types of items at Whole Foods’ eight locations in the city that were open at the time. They found every label was inaccurate, with many overcharging consumers, agency spokeswoman Abby Lootens told The News.
Whole Foods spokesman Michael Sinatra said the Texas-based chain "never intentionally used deceptive practices to incorrectly charge customers."
Sinatra said Whole Foods disagrees with the city's findings and is "vigorously defending" itself against the allegations. Sinatra also noted that the store always refunds any items found to have been incorrectly priced.
Whole Foods, according to the city, wasn’t the only bad apple. The sweep included 120 grocery stores citywide, and 77% were hit with one or more violations.
SUSAN WATTS/NEW YORK DAILY NEWSMini roast beef sandwiches were all priced at $3.49 for 3 ounces, despite their varying weights, from 4.5 to 5.1 ounces.
But the notoriously pricy chain was the most egregious offender — leading DCA to open a full-blown investigation of its pricing practices last year, said Commissioner Julie Menin.
"Our inspectors told me it was the worst case of overcharges that they've ever seen," Menin said.
The overcharges ranged from 80 cents for a package of pecan panko to $14.84 for a container of coconut shrimp, Lootens said.
Overall, the city's Whole Foods stores have received more than 800 violations during 107 separate inspections since 2010, totaling more than $58,000 in fines, a Daily News analysis of data obtained via a Freedom of Information Law request shows.
Menin says the findings were particularly shocking because the chain has been fined for the same violations several times.
The Columbus Circle location has the dubious distinction of being hit with the most pricing violations in the entire city — 240 during 28 inspections dating back to 2010 — The News found. The violations range from failing to display prices to overcharging at the scanner and adding tax to items that are not taxable under state law.
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The Daily News picked up organic chicken breasts while shopping at Whole Foods in Tribeca.
A source familiar with the investigation said a Whole Foods store employee told a DCA inspector that the mislabeled prices were ordered by corporate honchos.
The New York City probe comes after Whole Foods agreed last summer to pay $800,000 to settle a California investigation that found similar problems.
In New York, some of the most common violations were for pre-packaged items that all had identical weights and prices, such as vegetable platters, chicken tenders and berries.
But not all of the inaccurate weights led to cost overcharges, a News review found.
The News picked up $100 worth of groceries at the Tribeca store on Tuesday and found that some identically-priced items actually led to consumer discounts.
Mini roast beef sandwiches were all priced at $3.49 for 3 ounces, despite their varying weights, from 4.5 to 5.1 ounces. Similarly, breaded chicken breasts were all priced at $5.99 for 7 ounces, even though the actual weights ranged from 6 to 9.2 ounces.
SUSAN WATTS/NEW YORK DAILY NEWSDaily News reporter Reuven Blau examines a pack of organic chicken breasts.
"Because of the volume of product that gets produced unintentional mistakes are made," said Jay Peltz, general counsel and vice president of government relations for the Food Industry Alliance of New York, which represents major food retailers and wholesalers in the city.
"If a product is delivered to a store pre-packed and pre-sealed and pre-labeled the retailer does not have control over the packaging and weighting. It's not the retailer — it's the manufacturer that packed the product," he added.
While labeling errors afflicted all of the city's major grocery store chains, Whole Foods' pricing problems stood out as particularly systemic, a News analysis found.
Eight of the city's nine Whole Foods were among the 24 supermarkets that have been hit with five or more charges for inaccurate labels since 2014, according to The News analysis. The Upper East Side location, which just opened in February, has not been nabbed breaking any rules.
The Union Square location was hit with the most counts of mislabeled packages out of any supermarket in the city since 2014 — with 15 during two inspections. The Tribeca location came in second with 14 charges and the Brooklyn location third with 13 charges, both during two separate inspections.
The Garden of Eden on 14th St. was fourth with 11 charges and a Whole Foods in Chelsea was fifth with eight.
John Coskun, the manager at the Garden of Eden, said their problem was outside vendors who mislabeled the weight on items.
"You can see some prices are really high and wonder why. I always assumed it was because they were selling something really healthy or organic," said analyst Marlena Sebunia, 29, as she exited the Whole Foods store in Tribeca.
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